Question

Kubin Company’s relevant range of production is 27,000 to 29,000 units. When it produces and sells 28,000 units, its average costs per unit are as follows:

  

	Average Cost per Unit
Direct materials	$	8.70
Direct labor	$	5.70
Variable manufacturing overhead	$	3.20
Fixed manufacturing overhead	$	6.70
Fixed selling expense	$	5.20
Fixed administrative expense	$	4.20
Sales commissions	$	2.70
Variable administrative expense	$	2.20

Required:

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 28,000 units?

b. What is the total indirect manufacturing cost incurred to make 28,000 units?

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 28,000 units? (Round per unit values to 2 decimal places.)

b. What is the total indirect manufacturing cost incurred to make 28,000 units? (Round per unit values to 2 decimal places.)

	1a. Direct materials per unit Direct labor per unit Direct manufacturing cost per unit Number of units sold Total direct manufacturing cost 1b. Variable manufacturing overhead per unit Fixed manufacturing overhead per unit Indirect manufacturing cost per unit Number of units sold Total indirect manufacturing cost

2. Assume the cost object is the Manufacturing Department and that its total output is 28,000 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department?

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

2. Assume the cost object is the Manufacturing Department and that its total output is 28,000 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department? (Round per unit values to 2 decimal places.)

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

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	2a. Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit Total manufacturing cost per unit Number of units sold Total direct costs 2b. Total indirect costs

3. Assume the cost object is the company’s various sales representatives. Furthermore, assume that the company spent $117,600 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives’ compensation.

a. When the company sells 28,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives?

b. When the company sells 28,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

3. Assume the cost object is the company’s various sales representatives. Furthermore, assume that the company spent $117,600 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives’ compensation.

a. When the company sells 28,000 units, what is the total direct selling expense that can be readily traced to individual sales representatives? (Round per unit value to 2 decimal places.)

b. When the company sells 28,000 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

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	3a. Sales commissions per unit Number of units sold Total sales commission Fixed portion of sales representatives’ compensation Total direct selling expense 3b. The total indirect selling expense

Answer 1

Formula sheet

A	B	C	D	E	F	G
2
3			Average Cost per Unit
4		Direct materials	8.7
5		Direct labor	5.7
6		Variable manufacturing overhead	3.2
7		Fixed manufacturing overhead	6.7
8		Fixed selling expense	5.2
9		Fixed administrative expense	4.2
10		Sales commissions	2.7
11		Variable administrative expense	2.2
12
13		Total units produced and sold	28000
14
15		1)
16
17		a)
18
19		Direct materials per unit	=D4
20		Direct labor per unit	=D5
21		Direct manufacturing cost per unit	=SUM(D19:D20)
22		Number of units manufactured	=D13
23		Total direct manufacturing cost	=D21*D22
24
25		Total Direct manufacturing cost	=D23
26
27		b)
28
29		Variable manufacturing overhead per unit	=D6
30		Fixed manufacturing overhead per unit	=D7
31		Indirect manufacturing cost per unit	=SUM(D29:D30)
32		Number of units sold	=D13
33		Total indirect manufacturing cost	=D31*D32
34
35		Hence total indirect manufacturing cost	=D33
36
37		2)
38		a)
39
40		Direct materials per unit	=D4
41		Direct labor per unit	=D5
42		Variable manufacturing overhead per unit	=D6
43		Fixed manufacturing overhead per unit	=D7
44		Total manufacturing cost per unit	=SUM(D40:D43)
45		Number of units sold	=D13
46		Total direct costs	=D44*D45
47
48		b)
49		Administrative costs will not be easily traceable to manufacturing department.
50		Total indirect costs	=(D9+D11)*D13	=(D9+D11)*D13
51
52		3)
53		a)
54		Sales commissions per unit	=D10
55		Number of units sold	=D13
56		Total sales commission	=D54*D55
57
58		b)
59
60		Fixed portion of sales representatives’ compensation	=D8*D13	=D8*D13
61
62		Hence total indirect selling Expense not traceable to sales representative is	=D60
63